Buy To Let

The majority of lenders will require you to own your own home before buying another property but it is lender specific with some lenders being happy with pretty much anyone, within reason. Some lenders have minimum age criteria such as requiring you to be twenty-one or even twenty-five.

When it comes to getting a mortgage, most lenders will use an affordability calculator which takes into account the potential rental income against the amount of money you wish to borrow, although some may also have a minimum personal income requirement to cover any rental void periods.

If the rent is not quite enough to meet the figure set out by the lender, there are a few options that we can look at. Some lenders will allow ‘top slicing’ which is where the applicant’s own personal income is taken into consideration to top up the required amount. A hidden industry tip is looking at a five-year Fixed-rate deal, which reduces the rent required, as the lender’s internal stress testing rates aren’t set as high as when they’re on a two-year deal.

It just comes down to individual circumstances and looking at each individual lender.

Being a landlord means you are not only responsible for yourself anymore, you have a duty of care towards your tenants and need to ensure that the property is habitable.

You’ll also have to make sure you have the relevant safety certificates and insurances in place to protect your tenants, yourself and your property.

Ideally you want 25% or more but there are a range of lenders that will accept 20% and a couple that will even take 15%, but as with residential mortgages, the better rates typically become available with a higher deposit as there’s less risk to the lender.

This really comes down to individual goals and your investment strategy. If you want to maximise monthly cash flow then Interest-only may be the best option, as the repayments are much less due to the fact that the capital is not being repaid.

If you want to take a long term view and are not overly concerned about earning an additional monthly income then a capital repayment option may be most suitable. This will give you the peace of mind of knowing that the mortgage will eventually be repaid and the property owned outright, with all the capital within the property being available.

If you are purchasing a property that is not your main residence, you may need to pay a surcharge on top of the standard Stamp Duty rate and you will also have to pay tax on the rental income you receive.

You should also be prepared that there may be some weeks or months when the property is vacant, for example when you’re in between tenants. You will still be responsible for making the mortgage repayments, so it’s best to keep some money aside to cover this and we would always suggest a minimum of 3 months rent.